Check Point Software Technologies Ltd.

Results video conference. At this time, all participants are in listen-only mode during the formal presentation, which will be followed by a question and answer session. Joining me remotely today are Gil Schwed, founder and CEO, along with our acting CFO, Roy Gallant. As a reminder, the video conference is live on our website and is recorded for replay. To access the live conference and replay, information please visit the company's website at checkpoint.com for your convenience the replay will be available on our website if you would like to reach us after the call please contact investor relations by email at kip at checkpoint.com during this presentation checkpoint representatives may make certain forward-looking statements these forward-looking statements within the meaning of section 27a of the securities exchange act of 1933 and Section 21E of the Securities and Exchange Act of 1934 include but are not limited to statements related to checkpoints expectations regarding our products and solutions, expectations regarding customer adoption of our products and solutions, expectations related to cybersecurity and other threats, expectations regarding our 2023 initiatives, our ability to continue to develop platform capabilities and solutions, Customer acceptance and purchase of our existing solutions and new solutions. The market for IT security continuing to develop competition from other products and services. Our share purchase plans and general market political, economic, and business conditions. Trying to cover everything. These forward-looking statements are subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our annual report on Form 20F filed with the SEC. The forward-looking statements in this presentation are based on the information available to Check Point as of the date hereof. and Check Point disclaims any obligation to update any forward-looking statements except as required by law. In our press release, which has been posted on our website, we present GAAP and non-GAAP results, along with the reconciliation of such results, as well as the reasons for our presentation of non-GAAP information. And with that, I'd like to hand the call over to Roy Gallon, our acting CFO, for a review of our financial results.

And to review our fourth quarter.

So we had a strong quarter with revenues reached $638 million, which is 5 million above the midpoint of our projections. Our non-GAAP EPS was $2.45, 3 cents above the top end of our projections. As we move to the full year, our revenue reached $2,330 million, $42 million above the midpoint of our initial projections, and non-GAAP EPS of $7.40, $0.20 above the midpoint of our initial projections. Yeah, so we can see also here the accelerated growth that we had this quarter also and also for the full year, both in revenues and EPS. And before I proceed into the numbers, let me remind you that our graph financial results include stock-based compensation charges, amortization of required intangible assets and acquisition-related expenses, as well as the related tax effects. Keep in mind that, as applicable, non-GAP information is presented excluding these items. So now let's dive into the details of the view of the quarter. As I mentioned, our revenues grew this quarter by 7%, which is 6% last year. Our deferred revenues reached $1,878,000,000, represent 10% growth year-over-year. Our calculated billings reached $869,000,000. Let me remind you that our billing is affected by deals, timing, duration, and payment terms, and can fluctuate. Now we'll see that our accelerated revenues growth is mainly driven by our subscription revenues that reached $231 million, representing 30% growth year-over-year. That was mainly driven by our CloudGuard and Harmony pillars that both deliver double-digit growth. Also, I want to remind you that Q4 2021 was the first full quarter with Avanon impact on our subscription revenues. Another effect that has on our accelerated revenues growth was the strong adoption of our infinity strategy, which had a great portal, continued to flow in accelerated way to the revenues with 140% growth year-over-year. If we move for our revenues by year, so we can see this 49% of our revenues came from EMEA, 39% from the revenues came from America, and the remaining revenues came from APAC with 12%. It's important to know that we had growth across all geographies. Now if we are looking on the P&L highlights for this quarter, so our gross pockets reached $559 million with a strong gross margin of 88%. Those strong margins are impressive considering we continue to have some additional costs for raw materials and shipping, as well as price increase by many vendors. While we still see supply chain challenges, there is some relief and we expect to see modest improvement in 2023. Our operating expenses increased by 13% this quarter. This increase was mainly as a result of the continued investment in our workforce, including compensation and increased travel. Offsetting this increase, we also benefited from the stronger US dollar by approximately $10 million this quarter. Now we see that our operating income reached $289 million, representing 45% operating margin this quarter. Our financial income this quarter reached $15 million as we invest in higher interest rates over time. Our non-GAAP tax rates for the quarter was around 1%, mainly due to updates of our tax provision because of several tax assessments we have worldwide. Our non-GAAP net income was $301 million. or $2.45 per diluted shells, which is 3 cents above the top end of our projections, 9% growth year-over-year. Our gap net income was $270 million, or $2.20 per diluted shells. Now if we're going to move to the P&L islets for the full year, so you can see again that our revenues had a nice growth of 8% to build $2,330,000,000. Our gross margin was strong at 88%. Our operating expenses increased by 15% this year, mainly related to the increase in our workforce. Our ad fund was increased by 415 employees, 7% increase year-over-year. The effect of the P&L was higher mainly due to the fact that we edged the compensation in Israel in the beginning of 2022 with lower U.S. dollar rates, and also we had this higher travel and entertainment expenses as we are back to travel. Our non-GAAP operating margin was strong at 45% compared to 48% last year. As for 2023, a few factors about 2023. A significant part of our workforce increase was towards the end of the year. We started 2023 with higher run rate. Let me remind you, when we discussed last year's plan for 2023, we planned to be around 42%, 43%, but as the hiring took longer than anticipated, a significant portion of it was done in H2 2022. Also, during the second half of 2022, we'll attend to higher levels of travel, and we expect that our travel and entertainment expenses will continue to grow and continue to normalize at higher levels in 2023. As for the FX effects in 2023, more than 50% of our expenses are in local currency, and the strength of the U.S. dollar is expected to provide us a benefit. Based on this factor that I just mentioned, we expect that our operating margin for 2023 will be around 42%, Our financial income for 2022 was $44 million, reflecting the increased yield on the portfolio. For 2023, we expect incremental financial income between $1 to $2 million every quarter due to the high-yield portfolio investment yield. As for the tax rates for 2023, we expect similar tax rate this year compared to 2022, while for the modeling purposes, we expect a 14% tax rate for all pork oils. Now let's move to our cash flow and our cash position. Our cash balances, material and securities, and short-term deposits were $3.5 billion as of the end of the year. We had a strong operating cash flow of $230 million this quarter. Payments increased naturally as a result of elevated raw material costs and investments in workforce, as discussed. During the quarter, we continued our buyback program and purchased 2.6 million shares for $325 million at an average price of $124 per share. If we are moving to the full year, we see that we generated very strong cash flow with $1.8 billion for the year. We also, if we're taking, the cash flow from operation decreases by 9%, but the net of edge taxes and acquisition related costs, the operating cash flow was in the same level as in 2021. We repurchased 10.3 million shares for $1.3 billion at an average price for $126. For 2023, we expect our average diluted number of shares to be approximately 119 million shares for the year. starting with 121 million shares in Q1, moving down to 115 million shares by Q4, assuming a share repurchases of $325 million a quarter. In addition, we announced today also our expansion to our buyback program in an amount of $2 billion. Under the program, we are authorized to continue repurchase share up to $325 million each quarter, as we did in the last few years. So if we scan as a result, we had strong revenues and EPS for Q4 and for the full year of 2022. Our revenues and non-GAAP EPS above the need of our projection, three-digit growth for our Infinity revenues. And we keep focus on top-line growth when intending strong profitability. And now I'll turn the call over to Gil.